The sanctions violation charges slapped on the Russian billionaire Oleg Deripaska will not affect bauxite-alumina producer Windalco in Jamaica, experts say.
Russia-based UC Rusal, which owns Windalco, has indicated that political tensions in parts where it operates, including Jamaica, are leading to discussions of the sale of assets. Jamaica, however, downplayed such threats.
“There is no serious threat at this time, but we are closely monitoring the situation,” said Denis Miller, director of mineral economics and development at the Ministry of Transport and Mining.
Miller recalled that in 2018/19, the Jamaican government received an exemption from the United States government in relation to the local operations at Windalco. Additionally, Deripaska made adjustments to his share structure and resigned from the board, Miller added.
“So, the same rules of the exemption should apply,” he said, in response to queries on the impact of the latest development regarding Deripaska.
On September 28, US authorities charged the Russian, who is the indirect majority owner of Rusal, with the violation of US sanctions, having alleged that he conducted personal dealings using the US financial system, mainly to buy three homes.
“The Russian Federation, Ukraine, Jamaica and Guinea have been experiencing political and economic changes that have affected, and may continue to affect, the activities of enterprises operating in these environments. Consequently, operations in these countries involve risks that typically do not exist in other markets, including reconsideration of privatisation terms in certain countries where the group operates following changes in governing political powers,” Rusal stated in its quarterly report for the period ending June and published in mid-August.
Neither Rusal nor its subsidiaries have been sanctioned by Western countries. Rusal indicated, however, that sanctions are indirectly affecting its business. The company generated US$1.8 billion in profit over six months versus US$2 billion a year earlier.
“The imposition of economic sanctions on Russian individuals and legal entities by the European Union, the United States of America, Japan, Canada, Australia and others, as well as counter-sanctions imposed by the Russian government, has resulted in increased economic uncertainty, including more volatile equity, commodity and currency markets. The longer-term effects of implemented sanctions, as well as the threat of additional future sanctions, are difficult to determine,” stated Rusal in its quarterly report.
“The consolidated financial statements reflect management’s assessment of the impact of the Russian, Ukrainian, Jamaican and Guinean business environments on the operations and the financial position of the group. The future business environment may differ from management’s assessment,” it said.
Deripaska held 57 per cent of Rusal shares via a trust, according to the latest annual report for 2021. The latest information shows that the EN+ Group holds the shares in trust.
Back in March, the Jamaican Government had said it would consider all possibilities in relation to Windalco, including retaking ownership, after sanctions against Russia were ramped up in the wake of its February 24 invasion of Ukraine.
Jamaica owned a piece of Windalco up to 2014 when it offloaded its final 7.0 per cent stake to UC Rusal for US$11 million, which was used to partially offset a US$21-million debt to the Russian company.